Project (time) Control for an EPC project

Introduction

As part of the tasks and responsibilities of project control, the aspect of (time) control
during the course of a project can be applied in many ways.

The main elements which can influence the aspect (time) control during an Engineering,
Procurement & Construction project (EPC project) are described in this document. Each
of these elements contribute significantly to the effective control of a project.

Three phases of project control are identified during an EPC project. Within these phases,
a number of subjects are described which have a relation with the aspect (time) control.

1: Preparation phase

1.1 Project Execution Plan

1.2 Risk management & analysis

1.3 Project network planning

1.4 Control tools for the project phases

2: Control and reporting phase

2.1 Reliable (project) information

2.2 Timely availability of information

2.3 Consistent availability of information

2.4 Project control as “bottleneck”

2.5 Changing circumstances

2.6 Competence of project members

2.7 Role of the project control employee

3: Evaluation phase

3.1 “As built” project control information

3.2 Project close-out reporting

Author: P.W.M. Zwinkels Page: 1 of 12 25th January 2006

 Project (time) Control for an EPC project

1: Preparation phase

1.1 Project Execution Plan

The drawing up of a Project Execution Plan (PEP) is one of the first steps in the
preparation for the execution of an EPC project. The main components of this plan,
relating to project control and forming the basis of a effective approach towards project
control are:

a) The definition of the project goals.

b) The definition of various project structures, allowing for organisation and control at
pre-defined levels of detail:

- Work Breakdown Structure (WBS)

- Organisation Breakdown Structure (OBS)
- Cost Breakdown Structure (CBS)

c) The definition of the scope of work and respective budgets. The “boundaries” of the
project are defined at a high level and form the basis for the setup and maintenance of
different project control systems (ref. 1.4 Control tools for the project phases). By
“freezing” the project scope during the definition phase of the project, a clear basis for
change control and variation control is achieved.

d) The establishment of a management schedule, in which the project goals, the various
structures and the project scope are translated into. This schedule identifies at a high
level the major activity timeframes, budgets and key milestones, as well as the critical
path of the project. It identifies the project execution strategy!

Figure 1: Management schedule

e) The establishment of a cost plan based on the management schedule and the defined
budgets. In this manner the financing of the project costs can be determined and
visualised.

f) The definition of project control requirements, procedures, audit schedules and

schedule/cost/ risk reviews for each phase of the project.

The abovementioned project control elements are set-up and incorporated into the PEP,
in conjunction with the company and project management strategies.

1: Preparation phase (continued)

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 Project (time) Control for an EPC project

1.2 Risk Management & Analysis

Risk Management forms an integral part in the decision making mechanism of Project
Management. Every part of the Project Management team is involved in definition and
follow-up of Risk Management, including project controls!

One of the tasks of project controls is to perform quantitative risk analyses in support of
the management of project risks. This is achieved by applying time related risk
constraints to the schedule and performing “what if” analyses.

Risk Management and control is performed on a periodic basis throughout all phases of
the project. Project risks are defined in the definition phase and form the basis of setting
the project execution strategy and can also be found in the project execution plan. Each
of these risks is entered into a “Risk Database”, which generates detailed and summary
risk reports.

All risks are categorised into groups and are related to types of risk. After defining and
categorising all the risks, the effect of each risk is identified. These effects can be
categorised into three groups:

- Schedule
- Financial
- Scope

Corrective measures to eliminate or reduce any one of these effects are defined in the
Risk Database and appropriate action is taken by the responsible person.

During each phase of the project, these risks are monitored periodically and, if
applicable, additional risks are identified during risk management reviews and
incorporated in the Risk Database.

RISK ANALYSIS RISK MANAGEMENT

QUALITATIVE QUANTITATIVE • Identify Preventive Measures

• Establish Contingency Plans
RISK RISK • Initiate Further Investigation
ASSESSMENT MEASUREMENT
• Consider Risk Transfers
PROBABILITY HIGH COST • Consider Risk Allocation in Contracts
IMPACT LOW TIME • Setting Contingencies in Cost
Sensitivity Analysis • Setting Float in Schedules
To change (each) risk variable to
determine effect on cost and/or time • Tolerances / Space in Performance Spec's
Probability Analysis
Random calculation of values within a
specified probability distribution
•Remove
Minimum Optimistic
•Reduce
. .
Mean Most Likely •Avoid
. .
Maximum Pessimistic •Transfer
•Accept

Figure 2: Risk Analysis & Management overview

1: Preparation phase (continued)

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 Project (time) Control for an EPC project

1.3 Project network planning

In addition to the abovementioned preparations, a project network planning is

established. Two of the most important reasons to create a planning for an EPC project
are:

1) The visualisation of all internal as well as external steps in the various work
processes that take place during the project.

2) Obtaining commitment throughout the project organisation for the execution of

the project according the agreed planning.

Through the planning of work processes, the transition in responsibility from one step in
the process to the next becomes transparent. Subsequently, all external dependencies or
interfaces that have a relationship with the project are visualised.

With this planning the internal activities of the project can be controlled in time, after
evaluation and incorporation of the status. It is also possible to identify whether external
activities are influencing the execution of the project. This way, the influences can be
visualised the moment they occur.

There are additional benefits in preparing a network planning such as; critical paths, the
amount of float and the distribution of resources (labour, material and cost). Be aware
that the preparation of a network planning for large and complex projects can be very
time consuming!

Figure 3: Project network planning

1: Preparation phase (continued)

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 Project (time) Control for an EPC project

1.4 Control tools for the project phases

In a EPC project the following project phases can be identified:

a) Engineering phase

b) Procurement phase

c) Construction phase

To control each project phase in more detail, the following control methods can be set-
up:

a) Engineering phase
During this phase, the progress of the engineering scope can be monitored by document.
Efficiency can be monitored by man-hour expenditure in relation to the progress of
deliverables. This allows for effective monitoring and reporting of the available
information generated during the engineering phase of the project. By means of a “roll-
up” of data through the pre-defined structures, detailed information is summarized to a
management level with relative ease. The comparison of the obtained status with the
project network schedule shows where advances or delays to the project occur.

Figure 4: Engineering man-hour & progress curve

1: Preparation phase (continued)

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 Project (time) Control for an EPC project

1.4 Control tools for the project phases (continued)

b) Procurement phase
All procurement activities are defined, planned and controlled through use of a
procurement tracking system. All equipment and bulk materials can be allocated to
requisitions and purchase orders. During the entire procurement cycle, up to the arrival
on the construction site, the status of equipment and materials can be controlled and
monitored. The procurement cycle to subcontract (part of) the work to third parties can
also be tracked with this system.

Figure 5: Procurement progress report

c) Construction phase
As the project evolves and (part of) the work is subcontracted to third parties, the
various subcontractors working in the construction phase supply progress input into one
central progress system which allows for summarisation of all the detailed information up
to a management level, for analysis of the current situation, and quantified decision
making to keep the project on schedule.

The use of a structured and comprehensive control system and reliable project control
tools reduces the risk of claims from other companies and thus forms an excellent means
to support claim prevention.

Figure 6: Construction progress report

2: Control and reporting phase

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 Project (time) Control for an EPC project

During this phase of project control, the main focus is to achieve effective time control of
the project.

One of the main tasks of project control is the obtaining and processing of planning,
progress and financial information during the engineering, procurement and construction
phases of the project as defined in the preparation phase.

Making use of various control tools will contribute to an effective and efficient gathering
of project status information. Based on this information, a planning and cost analysis is
performed, resulting in a comparison of the current status with the project strategy.
Corrective actions and possible variations to the project strategy are reported to the
project management for evaluation and action.

However, project control is more than just generating, analysing and reporting of
physical progress on the project. Through their position as project control employee, a
total overview of the project can be obtained and in this role they can contribute greatly
to the success of the project.

2.1 Reliable (project) information

As mentioned earlier, the obtaining and processing of project status information, making
use of pre-defined systems, is a task of project control. However, the available
information must be correct and complete. The right decision can only be made with
reliable information!

Comparable signals > Reliable information

The project control employee collects and compares information from different sources to
validate the reliability of the information received. This reduces the chance of making use
of the wrong information. This validation process can take up a lot of time (especially in
the initial phase), but it can prevent decision making based on incorrect information.

- Detailed and registered project information

o Planning
o Procurement overview
o Task list
o Document list
o Item list
o Action list
o Timesheets

- Information from a second source (internal or external)

o Reports from the contractor or fabricator
o Information from the client
o Feedback from line managment
o Audits
o Questionnaire
o News bulletins

- Information through feedback with the responsible person

o Discussion
o Interview
o Meeting

2: Control and reporting phase (continued)

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 Project (time) Control for an EPC project

2.2 Timely availability of information

The timely receipt of information is just as important for effective project management as
reliable information. If the delivered information is not up to date, or is not received in
time for the meeting in which it immediately can be used, then project management
loses effectiveness.

How often does it happen that important information is presented during an internal
project meeting, which does not allow for sufficient evaluation and timely decision
making? Either a hurried decision during the meeting turns out to be incorrect, or actions
and responsibilities can only be delegated during the next meeting, which might be too
late…

The earlier reliable information is available, the more time remains to make a valued
evaluation and the more alternatives are left to choose from. However, this can prove to
be a disadvantage, as the available time is used to divert from the project goals, or
decisions on the project are unnecessarily delayed due to the absence of time pressure!
It is therefore important to decide what should be done with the available project time on
a continuous basis.

2.3 Consistent availability of information

Not only the availability of reliable information at the right moment is important. Also the
consistent receipt and registration of the status of scope of work is required for an
effective control of the project. The weekly or monthly registration of progress
information will contribute to the establishment of a concise overview of the development
of the achieved progress on the project. Trends can be identified and corrective action
can be taken at the earliest moment.

2.4 Project Control as “bottleneck”

Making predefined systems and structures available which are utilized by all project team
members contributes to an organised receipt and expedient processing of project status
information. This will enable the project control employee to generate management
information in a short period of time, which can be made available before the start of e.g.
an important progress meeting. This will increase the effectiveness of the project
manager in the meeting, as well as the meeting itself.

Information- and progress systems:

Project team members (partly) responsible:

o Document control system
o Time registration system
o Procurement system
o Punchlist system
o Central actionlist

Project control employee responsible:

o Engineering progress system
o Procurement progress system
o Construction progress system

2: Control and reporting phase (continued)

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 Project (time) Control for an EPC project

2.4 Project Control as “bottleneck” (continued)

By spreading the responsibility in the supply of project information, by using a variety of

information systems, it is possible to avoid that project control becomes a bottleneck in
the timely supply of analysed information to project management. The gathering and
processing of project information is not a full time job for the project control employee,
but it becomes possible to fulfil the reporting requirements after a minimal processing
period and allowing time for a thorough review and analysis.

It is imperative that project control is the central point of information obtainment and
supply on the project, although this information is generated by a variety of project team
members.

project control

2.5 Changing circumstances

During the course of the project, changing circumstances will occure that have an effect
on the control of the project.

Internal <> External

Direct <> Indirect
Foreseen <> Unforeseen
High impact <> Low impact

As a project is always executed by people, these changing circumstances can happen in

any situation, at any time during the course of the project. For example; the internal
shortage of employees, unforeseen absence of personnel through illness or accident,
seasonal influences, culture differences, the ever changing market, interests of third
parties, changes in laws etc.

All changes that have an impact on the project execution strategy will have to be valued
and treated based on their effects.

2.6 Competece of project team members

Another aspect that determines the level of control on a project is the competence of the
project team members. Of course the expression “the right man for the job” is valid
when it comes to the level of knowledge and expertise that is required. However, the
level of input, motivation, commitment and positive approach of an employee also plays
an important role. This is valid for everyone contributing to the project, through all levels
of the organisation.

2: Control and reporting phase (continued)

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 Project (time) Control for an EPC project

2.7 Role of the project control employee

As an integral part of the project organisation, the project control employee plays an
important role in the effective control of a project.

“Plan the Work > Work the Plan”

As part of the preparation phase, buy-in to the project planning is obtained from each of
the responsible project team members. If the time goals of the project, as set in the
project planning, continue to be supported throughout the course of the project, the plan
can be maintained without further modifications. This could be because enough flexibility
(float) has been built into the planning.

The project control employee plays an important role in the maintenance of the project
planning, which can be very time consuming. Although the responsibility for the
execution of the work that is set-out in the planning lies with the other project team
members, the project control employee is “the owner” of the planning product. It is their
job to “sell” and “promote” the planning.

“Better to follow an imperfect plan consistently and successfully, than to have a perfect
plan fail through constant modification and improvisation”

“Effective control”
What is important or critical? What requires the most attention? Where is detailed project
control required? These questions can be answered at the beginning of a project by
determining the risks on the project. However, as soon as the project kicks off, changing
circumstances will occure that were not foreseen. The project control employee should
have the flexibility to fulfil the project control tasks in such a way that they are result
orientated. This means that based on the requirements on the project it should be
possible to divert from the predefined structure, in order to focus on that what is
important to achieve the project goals. Do not waste time generating reports that are not
(in)directly contributing to the success of the project!

“Communication Specialist”
The communication skills of the project control employee can have an influence on the
effectiveness of the planning. As mentioned above, the plan must be supported by all
responsible parties. The project control employee contributes to this through effective
communication with the responsible team members.

Internal communication
Using different communication forms to encourage team members to work together and
execute planned activities over and above their formal responsibilities. The motivating,
convincing and inspiring of team members forms the key to success in effective control of
a project: “Teambuilding”!

External communicaton
Communication with external parties directly involved with the project, such as clients,
partners, suppliers, contractors and other contractual agencies forms an integral part of
the responsibilities of project control.

Communication related to the status of the project with external parties indirectly
involved in the project, such as line management, government and other concerned
parties, can also be a part of the responsibilities of project control.

2: Control and reporting phase (continued)

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 Project (time) Control for an EPC project

2.7 Role of the project control employee (continued)

“in comparison to the project manager”

The combination of project manager, project control employee and project is always
unique. The role of the project control employee, but also the effectiveness, is highly
dependant on the role of the project manager. They can support each other in the
execution of various project control activities on the project.

“Trendsetter”
Through quantity analysis of the work process steps within the project, it is possible for
the project control employee to identify trends at a relatively early stage, which will
enable project management to take corrective actions. The following of quantity trends
can supply useful information in addition to the analysis of the project planning and the
periodic progress of activities.

Figure 9: Production trend overview

3: Evaluation phase

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 Project (time) Control for an EPC project

Part of the close out phase of the project is the delivery of “as built” planning and cost
information, lessons learned and improvement proposals to management for
implementation on future projects.

3.1 “As built” project control information

Through the consistent obtainment and inventory of project progress information a vast
amount of data is available for the evaluation of achieved results during the course of the
project.

This information can be presented in a variety of way’s to suit the requirements,

visualising specific situations that have taken place during the project.

The actual achieved start and end dates of activities in the network planning can be
mirrored against the originally planned dates, or other important moments during the
project. A comparison in this manner may clarify when certain delays started, what may
have caused these delays and how much impact they have had on other activities on the
project.

This has an added value for the analysis and identification of internal improvement areas,
as well as the supply of backup for any possible disputes with third parties.

3.2 Project close out reporting

Based on the abovementioned presentation and analysis of actualised project

information, lessons learned can be formulated for future projects. These can become
part of the project close out report, together with all statistical project control
information.

Together with all relevant technical project information, this forms the basis for the
project archive.

The availability of informative data from historical projects and the clear formulation of
improvement areas for future projects will in turn contribute to the effective control of
new projects!

Author: P.W.M. Zwinkels Page: 12 of 12 25th January 2006